Corporate Finance Division
Insurance Company Venture Capital
Insurance is equal transfer of risk of a loss, from one entity to another in exchange of money. Alternatively speaking, it is a kind of risk management primarily used to hedge the risk of a loss to property or life. An insurer, or insurance carrier, sells the insurance. The policy holder, or the insured, is the person or entity buying the insurance policies. The amount of money charged for a certain type of insurance plan is called the "premium". Risk management is the practice of appraising and controlling risk. The insurer, generally, receives a contract called the "insurance policy", which lays out the terms and conditions under which the insurer will be finally compensated.
Deal activity in the insurance tech space hit its highest annual total in 2016. In total, investments in insurance tech startups rose 42% on a year-over-year basis in 2016 to hit 173. Total funding to insurance startups in 2016 hit $1.69B, the second consecutive year investment dollars to the space topped $1B. Overall dollars to the space fell 37% year-over-year between 2015 and 2016, as two separate deals to online HR software firm Zenefits and Chinese online insurer Zhong An Insurance accounted for $1.43B in total funding.
Fostering Growth without Diluting Equity:
For Insurance Industry companies at critical stages of development, debt can serve as a key financing option to foster growth, with minimal dilution of equity ownership. At Synergy Capital Markets, not only do we understand the industries of our portfolio Insurance Industry companies, but we also understand the growth process - and occasionally the growing pains - they undergo.
When venture debt is used appropriately, we believe entrepreneurs gain the following benefits:
Able to raise capital in a way that benefits the team and the business as a result of the greater flexibility offered by venture debt than traditional forms of debt financing
Have more time between equity rounds to build the business and achieve critical milestones, which creates potential for greater valuation
Retain a larger ownership stake in the company prior to an IPO or other liquidity event
Achieving milestones quickly in many cases also means reaching the IPO stage more rapidly